A review of regulations on major U.S. banks may be forthcoming, especially after a $2 billion trading loss with JPMorgan Chase was announced last week. While many argue tougher restrictions should be enforced in order to prevent other major financial losses, banks, large and small, are concerned over the costs associated with the regulations.
Local certified public accountants and bankers met Tuesday night at the Johnson City Country Club for an annual meeting, where Greg Gonzales, Tennessee Department of Financial Institutions commissioner, gave an overview of what’s happening in financial institutions, discussed the consumer protection-financial protection bureau, the environment and Gov. Bill Haslam’s TNForward Top to Bottom Review of recommendations from the Tennessee Department of Financial Institutions and how banks would be impacted.
In the 2012 Financial Institutions Top to Bottom Review, some recommendations included providing for a safe and sound system of financial institutions, to work with state and federal regulators to determine what burdens could be reduced for community based depository institutions and how to make department processes more efficient and effective.
Gonzales said the goal at the state level is to make sure community banks are put in a position to be successful.
“The state of Tennessee is made up of over a 150 community banks. They all do a great job in serving their communities and it’s important that regulators do what we can do to put those institutions in as good of a position as possible to continue serving,” he said. “We’re coming out of a slow recovery, we’ve got more regulations coming out of Washington, so we’ve got to find balance in all of this to make sure that those institutions are still able to not just survive, but thrive.”
“One of our main recommendations to the governor is in effect by us and others to try to find ways to reduce unnecessary burden on community banks,” Gonzales said. “I think it’s important that we do that, particularly because of the regulatory environment in Washington. There’s a lot of new regulations and that is focused on the largest banks. We just want to make sure that it doesn’t trickle down in a way that impacts the smallest banks.”
Don Royston, a CPA with Dent K. Burk Associates, P.C., said community banks in our area are already seeing the costs of enforced regulations.
“From the accounting standpoint, the local banks, particularly the community banks in this area, have been hit with an unbelievable amount of dollars in costs from regulations, and in my opinion, a lot of times over regulations,” Royston said. “Community banks in this area, other than making bad loans or getting pulled into a bad investment, they’ve done a really good job. The costs are phenomenal that they’re having to encourage just to stay in business.”
Gonzales said he hopes to find a way to regulate, but do it in a equal way where it won’t be overly aggressive to institutions that don’t deserve the tougher restrictions.
“We don’t want to put healthy, well managed institutions in a difficult position,” he said. “Depository institutions certainly are going to be regulated and the question is are we going to do it in a balanced way so we can put them in a position to be successful. That’s what it comes down to.”